An Introduction to OTT and CTV

Home , CTV (pay television), Roku, Sling TV, Vudu

Kochava Guides for Marketers

1 Introduction

The way in which we watch television has changed. In a little more than a decade, television has undergone a dramatic transformation from scheduled cable programs to on-demand, streaming services with an explosion of new content, streaming apps, and devices from which consumers can watch.

The Evolution of TV

FIRST TRADITIONAL – 1927 TELEVISION

1948 – CABLE TV LAUNCHED

CABLE INTRODUCES – 1990 HIGH-SPEED INTERNET

1998 – NETFLIX VIDEO DVD RENTAL

FIRST DVR USED – 1999

2000 – BROADBAND INTERNET IS INTRODUCED

NETFLIX STREAMING & – 2007 APPLE TV LAUNCH

2014 – AMAZON FIRE STICK & ROKU TV LAUNCH

TV GOES CORDLESS – 2014/2015

2015 – HBO NOW LAUNCHES AND DOESN’T REQUIRE A CABLE SUBSCRIPTION DISNEY+ LAUNCHES – 2019

2020 – PEACOCK LAUNCHES

PARAMOUNT+ LAUNCHES - 2021

With these new forms of television, more advertising opportunities arise. Understanding this powerful marketing channel and how to utilize it best will give you the competitive edge in your brand growth and engagement efforts.

2 In this Guide

Getting it Straight: OTT vs. CTV. What’s the Difference? 4

Over the Top (OTT) 4

Connected TV (CTV) 4

A View From the Top: Unpacking the OTT and CTV Ecosystem 5

The Devices 7

Types of Streaming Services and Content Providers 9

Common Types of OTT Ads 11

OTT Advertising Platforms 12

The Benefits of Advertising on OTT and CTV 13

Addressability & Targeting 14

Viewability 15

Return on Investment (ROI) 15

Challenges with OTT and CTV 16

Measuring OTT and CTV 18

Measurement for Brands 21

The Future of OTT and CTV 24

Content Wars 25

More Devices per Household 25

Subscriptions 25

Glossary 26

3 Getting it Straight: OTT vs. CTV. What’s the Difference?

Have you ever wondered if you’re using the terms OTT and CTV incorrectly? If so, you’re not alone. According to a survey done by Brand Innovators, their respondents had varied definitions of OTT and CTV and some didn’t even know what the terms meant. Clearly, these terms are often misused so let’s start by setting the record straight.

Over the Top (OTT)

The term OTT refers to television and filmcontent streamed “over the top” of the internet directly to viewers, rather than through traditional broadcast, cable, or satellite mediums. Content may be streamed “over the top” on connected TV (CTV) devices, desktop/laptop, mobile phones, and tablets from apps or websites. As a general rule of thumb, use OTT when you’re referring to the universe of content being streamed “over the top” of the internet.

Connected TV (CTV)

CTV is used to describe TVs that are either directly internet enabled (eg, smart TVs) or the devices that can be plugged into a TV to stream content “over the top” of the internet–think Amazon Fire, Roku, and Chromecast sticks, Apple TV, PlayStation and Xbox gaming consoles, etc.

Over the Top (OTT)

OTT Streaming Services

Devices for Streaming OTT Content

Connected TV (CTV)

Desktop/Laptops Phones/Tablets Smart TVs Streaming Boxes/Sticks Game Consoles

Kochava is an official member of the IAB Tech Lab, which has put together an informative post on this subject.

4 A View From the Top: Unpacking the OTT and CTV Ecosystem

5 A View From the Top: Unpacking the OTT and CTV Ecosystem

ADVERTISERS ADVERTISING

OTT ADVERTISING PLATFORMS

Programmatic Platform Direct Publisher Direct

STREAMING SERVICES CONTENT

SVOD AVOD TVOD PVOD

CTV DEVICES KOCHAVA SOLUTIONS KOCHAVA

NON-CTV DEVICES HOUSEHOLDS

OTT

CONSUMERS

6 The Devices

Ads run through OTT may see airtime across a whole spectrum of devices, depending on where and how you buy your media (more on OTT advertising platforms later).

Non-CTV Capable of streaming OTT content, but not considered CTV, are devices including smartphones, tablets, and computers.

DEVICES

SMARTPHONES TABLETS/PADS DESKTOPS LAPTOPS

CTV CTV devices include: smart TVs, gaming consoles, and other streaming boxes/sticks.

CTV DEVICES

SMART TVS GAME CONSOLES STREAMING BOXES/STICKS

7 In the past year, the majority of OTT viewing has occurred on CTV devices while mobile and tablet devices only make up 15% of the viewing time. Among CTV platforms, Roku is the most popular by far.

Share of Time Spent Viewing OTT Streaming Video Worldwide, by Device, Q3 2020 (% of Total)

Share of Time Spent

TABLET (5%)

MOBILE PHONE (10%)

CONNECTED TV DEVICES (50%)

DESKTOP/LAPTOP (10%)

GAMING CONSOLE (10%)

SMART TVS (15%)

Connected TV Devices

48% 28% 8.5%

6.8% 5.5% Other 3.9%

Note: The above chart represents activity tracked by Conviva, broader industry metrics may vary; numbers may not add up to 100% due to rounding.

Source: “Conviva’s Latest Streaming Data Shows Advertisers Beginning to Reemerge; Rise of Smart TVs Slows Growth for Connected TV Devices.” Conviva, 20 Oct. 2020, www.conviva.com/press-releases/conviv-state-of-streaming-q3-2020/.

8 Types of Streaming Services and Content Providers

OTT content is accessible through a variety of streaming services and content providers in a video on demand (VOD) format, which allows viewers to select and view content when they choose. The two primary types are subscription video on demand (SVOD) and ad-supported video on demand (AVOD).

VOD

SUBSCRIPTION VOD (SVOD) AD-SUPPORTED VOD (AVOD) SVOD services, such as Hulu and Netflix, charge a flat AVOD services, such as Crackle and Vudu offer free subscription fee, usually at a monthly rate for unlimited access to video and television content but show ads to access to streaming content. the viewer as the method of monetization.

Transaction video on demand (TVOD) is another format that allows consumers to purchase download or viewing rights to a particular film, TV show, or TV episode on a transactional basis (think buying a movie on Amazon Prime Video or Vudu).

Premium video on demand (PVOD) is an even newer format enabling consumers to purchase early access to content prior to, simultaneously with, or shortly after its theatrical release. One example of this was Disney+ offering early access to Mulan, a 2020 release as a follow-on to the 1998 animated classic. Amazon’s Prime Video Cinema offers on-demand rental of titles currently in theaters.

Amazon Prime Video is a clear example of how a streaming service can fall into multiple categories, as it offers both SVOD, TVOD, and PVOD options. CBS All Access (now Paramount+) is both SVOD and AVOD, since it offers a lower subscription price with limited ads, or a premium ad-free option.

The Content

In the early days of OTT, services like Netflix were aggregators of existing video and film content from other networks, studio houses, and production companies. Today, most major players in the space also produce their own original content, with the goal of providing unique, hit titles that are only available through their service thus helping to retain and grow their subscriber base.

9 As of Q2 2020, here are the top streaming services on the OTT market.

Video Streaming Distribution Percent by Brand Q2 2020, P2+

NETFLIX (34%)

YOUTUBE (20%)

HULU (11%)

AMAZON (8%)

DISNEY+ (4%)

OTHER (23%)

Source Nielsen: “Growth Spurt: Time Spent Streaming Ad-Supported Video Is Outpacing Big-Name SVOD Viewing.” Nielsen, The

Nielsen Company, 18 Aug. 2020, www.nielsen.com/us/en/insights/article/2020/growth-spurt-time-spent-streaming-ad-supported- video-is-outpacing-big-name-svod-viewing/.

10 Common Types of OTT Ads

Advertisement spots run within OTT content typically take three forms: • Pre-roll: Ads inserted prior to the video content starting • Mid-roll: Ads inserted within the main video content • Post-roll: Ads inserted after the video content has finished

On most AVOD platforms, users are unable to skip the ad no matter its placement (pre, mid, post); however, because most ads are only 15, 30, or 60 seconds long, users tend to watch at least part of the advertisement, if not all of it. On YouTube, users usually have the option to skip the ad after five seconds. Within those first few moments, advertisers strive to capture the consumer’s attention to gain brand awareness and improve completed view rates.

Other Ad Formats

Platforms like Roku, Vizio, and others also offer endemic ad inventory on their home screens, screensavers, and more. These ad placements are commonly utilized for streaming services to promote their channel apps with spotlights on a particular movie or show premiere. The goal is to entice the consumer to add the channel app to their device, start a free trial, and even purchase or rent particular content.

11 OTT Advertising Platforms

There are three main avenues for advertisers to buy media on OTT.

• Programmatic

One of the most effective and cost-efficient ways for advertisers to enter the OTT space is through programmatic platforms. Ad placement can be automated with programmatic bidding because of direct relationships between inventory exchanges and other OTT advertising platforms. Advertisers are able to target audiences viewing OTT content across multiple streaming services, platforms, and devices.

• Platform Direct

Advertisers can choose to go directly to major platforms such as Roku, Vizio, Samsung, etc., and buy inventory through the platform’s own exchange. While this is a very straightforward way to buy ad space, it limits the campaign to that specific platform and doesn’t allow for cross-platform advertising.

• Publisher Direct

Going directly to the publisher (Hulu, Sling, Paramount+, Crackle, etc.) is another option and allows for more control over ad inventory. However, like Platform Direct, Publisher Direct limits the advertiser’s campaign to that specific publisher’s content.

12 The Benefits of Advertising on OTT and CTV

13 The Benefits of Advertising on OTT and CTV

Addressability and Targeting

As challenges mount to addressability and precise targeting in both mobile and display with recent changes to third-party cookie policies and the decreasing availability of the identifier for advertisers (IDFA) on iOS devices, the OTT space offers great advantages.

Programmatic, platform-direct, and publisher-direct platforms all incorporate first- and third-party data to extract insights which can help advertisers reach the right audience, create personalized messaging, deliver a better customer experience, and reduce wasted media spend.

OTT advertising platforms can address specific households, and in certain cases even the different devices within those households, with targeted advertising based on holistic user/household profiles that include insights on:

• Demographics

• Points of interest visitation

• Brand affinity

• Interests and behaviors

• Precision geography

• And more

This enables microtargeting for maximum efficacy of ad spend. Further, due to household- level targeting, geofencing enables much more precise geographic-based targeting, which is particularly important for brick-and-mortar brands.

Brand Innovators found that 68% of survey respondents agree that the benefits of addressable advertising are the potential to target customers and geographies more precisely.

Ask how the Kochava Collective, a privacy-first, premium data marketplace can provide audience enrichment and household insights to drive your OTT efforts.

14 Viewability

An entire screen ad is hard to ignore, especially when it appears between episodes of your favorite show. Not only do OTT campaigns open up the advertisement space, the ads run on these platforms are viewed at a much higher completion rate. Further, Brand Innovators found that most of their survey respondents chose to run ads on OTT because “lighter ad loads keep audiences more engaged” as opposed to the heavily saturated mobile space.

Return on Investment (ROI)

With the mobile ad space saturated with advertisements, cost per install (CPI) rates have risen considerably along with cost per action (CPA) and cost per mille (CPM). The OTT space is premium inventory; however, direct targetability and high view completion rates make running ads on OTT more cost-effective in terms of ROI.

15 Challenges with OTT and CTV

16 Challenges with OTT and CTV

While there are a lot of benefits to running ad campaigns on OTT and CTV, it doesn’t come without its challenges.

OTT has a media fragmentation problem in all of its varying devices and platforms–making ad serving, mediation, frequency capping, and other processes quite challenging. This means it’s hard for advertisers to target and measure viewers from app to app and one operating system to another. There’s talk of a future universal ID that could be leveraged to simplify the measurement of viewing behavior across multiple devices, platforms, and apps, but nothing has materialized to date.

The OTT space is also no stranger to ad fraud. As money has poured into the space, fraudsters have followed–crafting sophisticated schemes to exploit server-side ad insertion and other technologies specific to OTT. Fraud schemes are frequently uncovered and found to have cost advertisers millions of dollars. Fraud prevention technologies are evolving to meet the need for better protections, similar to the capabilities developed by Kochava and other mobile measurement partners (MMPS) and providers to counteract and prevent fraud in the mobile ad ecosystem.

Most programmatic OTT deals use a private exchange environment. This gives media owners more control of their inventory and allows advertisers better transparency into what they are buying. Nonetheless, be sure to talk with your ad partner about these challenges as you embark upon your OTT growth journey.

17 Measuring OTT and CTV

18 Measuring OTT and CTV

Let’s touch on two distinct measurement needs within the OTT and CTV space.

First, OTT streaming services themselves need measurement in order to understand the audiences engaging with their content, where they came from, and what their preferences are.

Second, there are the brands, consumer packaged goods (CPG) companies and quick service restaurants (QSR) for example, that will run campaigns across ad-supporting OTT services to drive brand awareness and/or customer growth and engagement.

Let’s unpack each of these in further detail.

Measurement for OTT Streaming Services

CTV LAPTOP TABLET HOUSEHOLD GAMING SMART TV MOBILE CONSOLES

Think Disney+, Sling TV, Netflix, Paramount+, and beyond. There are thousands of OTT streaming services through which consumers can watch content for free with ads, or ad free through a paid subscription. Kochava specializes in delivering omni-channel, cross-platform measurement and attribution for these streaming services, as well as full lifecycle subscription management.

19 This includes:

• Measuring omni-channel acquisition and reengagement campaigns, including those run on OTT advertising platforms

• Capturing app installs, free trials, subscriptions, content views, watchlist updates, and other customer engagement across all platforms and connected devices

• Attributing customer activity back to the omni-channel marketing efforts (paid or owned media) that drove it to optimize media spend

• Connecting the dots across devices to understand every touchpoint through which an individual customer engages with the service and content

• Full lifecycle subscription management from free trial to paid subscription, subscription renewal to pending cancellation (involuntary or voluntary), and cancellation to successful recovery

Did you know you can measure across these OTT streaming devices and platforms with Kochava?

CTV COMPUTER MOBILE & TABLET GAME CONSOLES

AMAZON FIRE CHROME AMAZON FIRE PLAYSTATION ANDROID MAC ANDROID XBOX APPLE WINDOWS IPHONE & IPAD NINTENDO CHROMECAST HUAWEI LG ROKU SAMSUNG VIZIO

20 The data provided by measurement solutions like Kochava enables OTT streaming services to answer these vitally important questions:

• What marketing strategies are most successful in acquiring new quality customers that convert through the paywall to become paid subscribers or regular content watchers?

• What are some of the user journeys taken by our best customers by measure of retention and lifetime value (LTV)?

• Mobile -> Web -> CTV

• CTV -> Mobile -> Web

• Web -> CTV -> Mobile

• According to these journeys, on what platform and channel is our acquisition media spend most efficiently utilized (mobile, display, OTT and CTV)?

• On what devices and platforms are customers engaging with your content and based on that information, where can existing customers best be reached for reengagement and retention efforts?

• What’s the average watch time?

• What production content brings in new customers and keeps existing customers engaged?

Answering these questions and more is paramount to the success and longevity of OTT streaming services. To learn more about OTT and CTV measurement as a streaming service, contact us.

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Measurement for Brands

Suppose you’re a regional fast food, QSR chain and have a new menu item that will appeal to the customers of your chief competitor. Utilizing OTT advertising platforms and data-informed targeting, you launch a campaign microtargeted to households within a 5-mile range of your existing locations, with an affinity for other fast food QSRs, and with recent visitation to your key competitor based on point of interest (POI) data.

Your ad campaign runs with a call to action for customers to download your mobile app and place their order for a limited time buy one get one deal. Over 2 million households are reached and served an ad. What options exist for measuring the success of this campaign?

In addition to analytics on total impressions, unique households, pause-and-mute rates, and other performance metrics, a programmatic platform will likely have built-in measurement capabilities that help you directly tie in-app conversions back to individual impressions. Platforms like Roku, Vizio, etc., may also host such capabilities with independent measurement partners. This type of real-time attribution requires that you’re measuring your app installs and events with a measurement partner like Kochava.

21 Opportunities also exist to tie walk-ins/foot traffic back to a campaign via POI visitation data mapped to the households exposed to the campaign. Beyond that, let’s touch in more detail on two other approaches.

Incrementality Testing The topic of incrementality testing is quite complex. Incrementality testing attempts to answer one question:

Incremental Lift

In the absence of an ad, how many people would have taken the desired action anyway?

With Ad Without Ad

To answer this question, a target audience is first identified and then a percentage of that audience (10%-20%) is held back as a control (holdout) group. The remaining 80%-90% of the audience is the test group that is served with the campaign. The performance of the control group is compared to the test group and the performance gap between the two groups is the measure of incremental lift. A successful campaign would show positive and statistically significant incremental lift.

That said, incrementality testing can be expensive, and holding back 10%-20% of a reachable audience to act as a holdout group represents lost opportunity for growth. In cases where the holdout group is served a public service announcement (PSA) ad, further media spend must be expended. Last, but not least, most methods of incrementality testing don’t adequately address and eliminate unwanted biases between test and control groups that skew the validity of the incremental lift assessment.

Kochava MediaLift™

Kochava developed MediaLiftTM to address these significant hurdles and deliver valid incrementality testing with actionable results. MediaLift leverages a proprietary device scoring technology to model forensic control groups against the billions of device profiles found within

22 the Kochava Collective data marketplace. Utilizing a forensic control, MediaLift enables media to be run against 100% of the target audience, with no holdout group. Further, since the forensic control group is modeled directly against the test audience that was actually exposed to the campaign, the end result is a less expensive and far more accurate form of incrementality testing and lift measurement.

MediaLift is being used by some of the largest advertising brands and CTV platforms to measure the efficacy of ad campaigns on OTT. To learn more about MediaLift and request case studies, contact us.

Quick Response (QR) Codes

The use of QR codes in TV advertising is booming. More consumers are browsing on a second device while watching TV (known as the second screen trend) and most of the time that second device is their smartphone. Placing a QR code directly into the ad creative enables viewers to scan the QR code right from their screen and be immediately immersed into a digital experience on mobile web or in-app. QR codes not only provide a mechanism for direct response but also a method of measurement. QR code scans can be measured to determine the success of the campaign in driving viewers to respond in the moment and complete a down-funnel conversion (eg, app install, purchase, website conversion, etc.).

SCAN NONOWW AAND SAVE 50%

Interested in incorporating QR codes into your next campaign? Ask us how Kochava SmartLinks™ can help.

Apple TV and the AppTrackingTransparency (ATT) framework With the rollout of iOS 14.5, Apple will enforce the ATT framework, which will require users to give consent to app tracking across iPhone, iPad, and Apple TV. If a user opts-out of tracking through this framework, there are limitations in how a conversion can be attributed to paid media efforts across OTT advertising platforms and beyond. To understand the implications of the ATT framework on your OTT efforts, contact us for a free consultation.

23 The Future of OTT and CTV

24 The Future of OTT and CTV

eMarketer estimates that ad spend on OTT and CTV will exceed $18B by 2024 accounting for 5.4% of total media ad spending.

Source: Benes, Ross. “US Connected TV Advertising 2020.” eMarketer, Insider Intelligence, 10 Nov. 2020, www.emarketer.com/content/us-connected-tv-advertising-2020.

Content Wars

The battle lines in the streaming wars have largely been drawn, with the entrance into the space of the major network and studio titans in the form of Disney+, Peacock, Paramount+, and more. The OTT ecosystem will become more competitive as streaming services fight the content war to retain and win over new subscribers and viewers. This is good news for advertisers as OTT will continue to grow as a channel to drive growth and brand awareness.

More Devices per Household

As the number of devices per household continues to rise and OTT content becomes consumable on other Internet of Things (IoT) devices, measurement needs to keep pace. To survive, brands need to understand every consumer touchpoint across every device.

Subscriptions

Within the U.S., the amount of consumers who are subscribed to an on-demand service has increased from 52% in 2015 to 78% in 2020. As streaming services increase in popularity, so will subscriptions.

Kochava Subscriptions provides in-app and outside performance measurement throughout the whole user lifecycle with CancelGuard™ sending an alert before users terminate their subscription to give the opportunity to reengage those users to prevent churn and increase user retention.

Learn more about Kochava subscriptions here.

25 Glossary

AVOD (Advertising-based Video on Demand) AVODs are streaming services that offer free, ad-supported streaming video (eg, Crackle, Tubi, Vudu).

CTV (Connected TV) CTV is a television that can be connected to the internet and access content beyond what is available through the normal offering from a cable provider.

OTT (Over the Top) The term OTT refers to television and film content streamed “over the top” of the internet directly to viewers, rather than through traditional broadcast, cable, or satellite mediums.

Platform Direct Platform direct requires advertisers to go straight to the platform to buy inventory through their own exchanges.

Programmatic Platform Programmatic platforms are responsible for each stage of the advertising process and have a direct relationship with inventory exchanges and OTT advertising platforms.

Publisher Direct Publisher direct requires advertisers to go straight to the publisher to buy inventory through their own exchanges.

SVOD (Subscription Video on Demand) SVODs are streaming services that require a subscription (eg, Netflix, Hulu, & Amazon Prime Video).

26 Still have questions?

Learn more at Kochava.com